The Bank of Korea discovered that its central bank digital currency (CBDC) could process up to 2000 transactions per second, which is considerably below what the standard centralized ledger database provides.
The central bank of the Republic of Korea together with the issuer of the Korean Republic won, the Bank of Korea (BOK), is allegedly testing its CBDC digital token program on NFT trading and global remittances. Based on November 7 reports by local media outlet Yonhap News, the Bank of Korea has successfully completed its second phase of the CBDC pilot program.
Bank Of Korea And Its CBDC Tests
In recent months, the Bank of Korea has been developing a digital currency competent in the global markets. In that context, the Bank of Korea Governor Chang Yong Rhee said that interoperability is crucial for the success of a central bank digital currency. Nevertheless, some aspects of decentralized technology, like privacy, might be lost in many CBDCs, based on Rhee.
Furthermore, a majority of the international banks are regulated under money laundering and terrorist acts. Thus, the Bank of Korea is keen to have a highly interoperable digital currency competing globally. Rhee said:
“We have realized that there is no such thing as perfect technology or CBDC designs that can satisfy all the various goals and expectations at the same time. For instance, the bank made a decision to improve compliance at the sacrifice of privacy.”
Based on Yonhap News, the Bank of Korea discovered that its CBDC might process up to 2000 transactions per second, which is way below what the standard centralized ledger database offers.
South Korea Taps On Blockchain To Open Up Economy
South Korea wants to tap into the quick-developing blockchain technology in a similar version as its neighboring nations, including China. Interestingly, the Bank of Korea launched a pilot program for a retail CBDC in April 2020. BoK managed to finish the first phase of the pilot in December 2021 and has now finished the second phase.
By partnering with other central banks globally, the Bank of Korea expects to advance its payment network and increasing financial inclusion. The South Korean government wants to fill the position that digital assets have occupied via stablecoins, among other coins.
Additionally, digital assets led by Bitcoin do not fulfill the needed characteristics to onboard the unbanked in most nations.
In the meantime, the South Korean government has found a niche in non-fungible tokens (NFT) and CBDCs. Also, the NFT market has experienced some astronomical growth since early 2021, when Beeple sold a single artwork for $69 million.
The use cases for nonfungible tokens are wide, including metaverse, GameFi, and the speculation aspect. Nonetheless, all other real-world commodities can be minted as an NFT on a blockchain and traded among users.
Integrating CBDC with NFT trading capabilities will give the South Korean digital currency an upper hand over its competitors.
